1. All else the same, if banks choose to hold fewer excess reserves the money supply...
1. All else the same, if banks choose to hold fewer excess reserves the money supply will fall. (True/False)
2. When credit card companies increase the credit limits for their customers, this increase the money supply in the economy. (True/False)
3. Stocks and bonds are considered to be less liquid types of assets than a house or a car. (True/False)
4. When banks make loans, they create money. (True/False)
Homework Answers
1. False
(Money supply will increase when banks choose to hold fewer excess
reserves.)
2. False
(This does not increase the money supply in the economy.)
3. False
(Stocks and bonds are more liquid than a house or a car.)
4. True
(Banks create money by making loans.)
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1. All else the same, if banks choose to hold fewer excess
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